Malaysian palm oil futures bounced back on Thursday, after recording their sharpest fall in a week in the previous session, helped by a weaker ringgit and stronger performing soyaoil. The ringgit, palm oil's traded currency, weakened 0.2 percent to reach 4.3260 against the dollar in the evening. A weaker ringgit typically makes the tropical oil cheaper for holders of foreign currencies.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange rose 0.6 percent to 2,536 ringgit ($586) a tonne by the midday break, a third gain in four sessions. Traded volumes stood at 26,564 lots of 25 tonnes each at the end of the trading day. "A weaker ringgit and better soyabean complex is supporting the market today," said a futures trader from Kuala Lumpur, referring to the gains in palm's rival oilseed soya on the Chicago Board of Trade.
"However, there is underlying fundamental weakness due to build-up in April stocks and expectation of higher production which may cap the market's upside," he said. Palm oil output in Malaysia, the world's second-largest producer of the tropical oil, typically sees seasonal gains during the second and third quarters of the year. Production for April is expected to rise on-month as the lingering effects of the crop damaging El Nino wear off, traders said.
Palm oil prices are also impacted by other related edible oils, as they compete for a share in the global vegetable oils market. Soyabean oil on the Chicago Board of Trade was slightly down 0.03 percent, while the September soyabean oil contract on the Dalian Commodity Exchange fell 0.7 percent. In other related vegetable oils, the September contract for palm olein fell 0.5 percent.
Comments
Comments are closed.